Introduction

Almost all banks, NBFCs, and financial institutions levy loans to applicants only when the applicant has a good credit score. Cibil score is usually easily retrieved by visiting the official website of TransUnion CIBIL Score. A good CIBIL Score score enhances the chances of processing loan applications hassle-free and at lower ROIs. Read on to find out more details about CIBIL Score, CIBIL Score full form, and its importance.

What is CIBIL Score Score in India?

CIBIL Score full form is, Credit Information Bureau Of India Limited demotes the CIBIL Score score or the creditworthiness on the basis of his loan repayment and EMI repayment history. It is a three-digit number that is usually calculated based on financial history and ranges between 300 to 900. The higher the score the better the chances of loan approval. As per the analysis loan applications are easily sanctioned for those with CIBIL Score scores over 750. 

The CIBIL Score is dependent on multiple factors like the number of loans fetched, Types of credit, payment history, the deliberate opening, and outstanding loan amount. Different banks have different benchmarks for loan processing. 

What is a good and bad CIBIL Score Score?

A good CIBIL Score score lies between 720 and 900 and completely depends on your credit history and behavior. A good CIBIL Score score fetches multiple benefits to the borrower like quick loan approvals, fewer rates of interest, a high loan amount disbursal, etc. For unsecured loans, a score of 750 and above is termed a good CIBIL Score score. Individuals with good CIBIL Score scores have higher chances of a hassle-free loan process and better rates of interest. 

A credit score that is less than 650 is considered to be a bad CIBIL Score score. It is also to be noted that sometimes a score below 750 disqualifies you from being able to get a loan implying you have a bad credit history and financially irresponsible behavior in front of potential lenders.

Why is a good CIBIL Score Score important?

A good CIBIL Score score has multiple benefits, the major of which is that the applicant gets loan approvals most suited to his needs and requirements. How to improve the CIBIL Score score immediately has more to do with these factors:

High chances of loan approval

Every lender approves any loan or credit card request post analyzing your credit history. The impact can be irreversible and severe if the application is rejected. But a sound credit history does absolutely the opposite and lets your loan sanction process be as smooth as possible. 

Low rates of interest

A good and sound CIBIL Score score helps the borrower take a loan at lower interest rates and long tenures. This is because most lenders charge interest rates calculated based on the rate of default. 

Higher limit

A good credit score reflects you are eligible to avail of higher loans or credit limits. The default probability is rendered to be minimal with comparably lower rates of interest. 

How is CIBIL Score Credit Score calculated?

Now with these points in mind, there is a question that arises: how is CIBIL Score calculated and how is check CIBIL score? CIBIL Score score is calculated based on the below-mentioned factors.

Payment history

Payment history is one of the most crucial factors that affect your CIBIL Score score in either a positive or a negative way. If the repayment of all the outstanding bills is made on time, it boosts the credit score reflecting a positive mark on your weightage. While on the other hand, if even a single payment is missed or delayed, it brings down the credit score immediately and sometimes to even 100 points. These factors are equally crucial in how to check the CIBIL Score.

Credit Exposure

Credit exposure also known as credit utilization ratio is another factor that affects your CIBIL Score score. The credit utilization ratio is the amount of credit used by the individual in proportion to the credit limit approved. It is recommended to use only 30% of the approved credit limit for a proper reflection of your credit score and to minimize the chances of loan application rejections. 

Credit type and duration

A long credit history reveals your healthy relationship with managing your finances and handling credit. It is the reflection of the number of years that have passed since the opening of your first credit account. It is advised to not deactivate the credit cards that are not in use if you can manage the bills aptly. 

Other factors

Another factor that forms a crucial part of CIBIL Score score calculation is hard inquiries. Whenever a request or search for a loan or credit card is made, it fetches your CIBIL Score report from the bureau. The major part is that multiple queries of such type harm your score. 

How to check CIBIL Score Score?

You can easily check your CIBIL Score online using your PAN number. Just make sure you enter your PAN Card number, name, and date of birth and get the results of the free CIBIL Score score on your screen. 

If you are checking your Cibil Score using your Aadhar card then enter the address as mentioned on your Aadhaar Card. Sometimes, to download a Cibil Report, you need to provide the same address as mentioned on your Aadhaar Card.

Conclusion

All the financial reports are submitted by the lenders usually in a span of 30 to 45 days to the department of CIBIL Score. This includes payments, outstanding payments, and more. CIBIL Score receives this data and immediately reflects the due amounts. It is always advisable to monitor your CIBIL Score or credit report and immediately manage your credit score. Report any error directly to the CIBIL Score.